Schaeuble defends France against deficit criticism

BERLIN

German Finance Minister Wolfgang Schaeuble attends a cabinet meeting at the Chancellery in Berlin, February 6, 2013.

Reuters/Fabrizio Bensch

BERLIN (Reuters) - Germany's Finance Minister defended France against criticism it was not doing enough to cut its budget deficits, saying he was confident France was doing all it could to create growth while implementing reforms.

In an interview for the Saturday edition of the Stuttgarter Zeitung newspaper available on Friday evening, Wolfgang Schaeuble also urged the next Italian government not to turn away from the austerity measures introduced by the outgoing government.

"France will abide to its European requirements," Schaeuble said, adding he could not understand why people keep making demands on France to fulfil its obligations.

"I'm completely confident that France will not only stick to the European rules but will also do everything it can to generate growth while undertaking structural reforms in a difficult economic phase."

Earlier on Friday, a senior member of parliament in Chancellor Angela Merkel's Christian Democrats (CDU), Michael Fuchs, called France a "problem child" in the euro zone that needs to implement more austerity measures and labour market reforms to regain competitiveness.

"The French need to do their homework - they're very, very behind other countries and that is alarming because France is the second biggest economy in Europe," CDU lawmaker Fuchs said on Germany's Deutschlandfunk radio.

France has been steadily losing competitiveness to Germany and concerns are mounting that Berlin's insistence on fiscal austerity will delay an economic upturn in the euro zone's second biggest economy.

Asked if France was beginning to look like a crisis state, Fuchs said: "Unfortunately France is a problem child in the euro zone because other countries have done their homework a lot more intensively - for example Spain and Italy under (Prime Minister Mario) Monti, but the French believed they could escape this."

Also on Friday, European Central Bank board member Joerg Asmussen urged France in a Reuters interview to take "concrete and measurable" steps to bring down its budget deficit, saying Paris faced a test of its credibility and must come as close as possible to its 3 percent goal for this year.

Speaking after the European Commission forecast that France's deficit would come in at 3.7 percent of gross domestic product (GDP) in 2013, well short of target, Asmussen said the country had a special responsibility, along with Germany, for fiscal stability in the euro zone.

"If the Commission now forecasts that France will miss its target this year, then I think it's a matter of credibility that France takes appropriate steps as quickly as possible to correct this missing target, so that it can come as close as possible to the target for this year," Asmussen said.